Research On Related Problems Of Fraudulent Factoring Contract

With the development of China’s socialist market economy,the urgent need of enterprises for financing has become increasingly evident,financing channels have been expanded,and the number of factoring businesses and the scope of their application are on an expanding trend.In practice,there are a large number of legal issues surrounding factoring contracts that need to be regulated by law,and the inclusion of factoring contracts as famous contracts in the Civil Code is based on the needs of social practice.However,there are no specific detailed provisions on factoring contracts in our legislation.Only a few principle provisions in the Civil Code,which will come into force in 2021,will not fully resolve the large number of factoring disputes that exist,especially the issue of how the factor’s rights can be defended in fraudulent factoring contracts,where the legal relationship is complex,needs to be addressed urgently.This paper uses a case study method to analyse the issue of fraudulent factoring contracts and selects the case of Zhongxia Construction Group Company Limited and China Construction Bank Corporation Shanghai Branch No.2,which has been appealed for many times,as a typical case to illustrate the issues related to fraudulent factoring contracts.The three representative points of contention that often arise in factoring contract fraud disputes are extracted: whether the non-existence of the receivables affects the validity of the factoring contract,what liability the creditor of the fraudulent party(including the debtor in some cases)should bear,and whether the factor should bear part of the loss from the negligent examination.In view of the above controversies,this article discusses in detail the nature,validity and liability of fraudulent factoring contracts through the analysis of the nature and relationship between the underlying contract and the factoring contract,the analysis of the various possible liabilities of the fraudulent party,that is,it analyzes the definitions of the creditor and debtor in the original contract and the factor’s obligation to verify,and concludes that the validity of the factoring agreement is not affected by the original contract and that the factor is not liable for damages for negligent verification.It aims to help in practice by distinguishing between the conclusion that the validity of a factoring agreement is not affected by the underlying contract and that the factor is not liable for losses due to negligence,and the direction of maximising the solvency of the defrauded party and the interests of the defrauded factor.